Compliance

The Criminal Division’s Fraud Section of the Department of Justice (“DOJ”) published  an “Evaluation of Corporate Compliance Programs” (the “Compliance Manual”) which offers guidance on the common questions contemplated by the agency when making  determinations of corporate liability. My primary take away is that the Compliance Manual puts management on notice that the company will now be held to a higher standard regarding the details of its compliance program. (more…)

If you are a foreign company that wants access to the U.S. financial markets, make sure you  understand the U.S. Iran Transactions and Sanctions Regulations (ITSR). Administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), the ITSR, unlike other sanctions programs, contain secondary sanctions that apply to non-U.S. persons for wholly non-U.S. conduct that may occur entirely outside U.S. jurisdiction. Even if you are not doing business with Iran, several companies and individuals, many of whom are not Iranian, have been listed under the sanctions program, including 25 more added earlier this month. (more…)

The Commerce Department’s Bureau for Industry and Security (BIS) has issued a new rule that requires exporters to Hong Kong of items subject to certain controls under the Export Administration Regulations (EAR) to obtain either an import license or a written statement from the Hong Kong government as to why an import license is not required. The rule will be effective on April 19, 2017. (more…)

As the export agencies still strive to implement one system for export licensing and compliance, DDTC has come one step closer by creating a new on-line process for filing CJ requests.  As of November 16 at 5 pm, DDTC will no longer accept paper filings for CJ requests.  This morning, November 21,  DDTC started accepting electronic filings through the new Defense Export Control and Compliance System (DECCS). This new system will replace DTRADE and EFS and will allow the user to save drafts and copy previously inputted data.  Yay. Progress is made one small step at a time. (more…)

I know the title of this blog is Export Compliance Matters, but I feel compelled to provide evidence that  import compliance is also becoming a serious compliance risk. Customs and Border Protection (CBP) just announced Friday that the US government is owed 2.3 billion dollars in antidumping and countervailing duties alone. Moreover,  CBP  has issued several “informed compliance” letters encouraging prior disclosure of customs violations by warning the trade community that the CBP and Immigrations and Customs Enforcement are enforcing trade violations. The issuance of the letters comes in tandem with more sophisticated auditing techniques that CBP has developed to catch violations, including using customs data provided by CBP’s Automated Commercial Environment (ACE). (more…)

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has issued a voluntary disclosure guidance for export violations. The guidance takes effect July 22 and its intent is to make Commerce’s enforcement more in line with that of the Office of Foreign Assets Control (OFAC). Specifically, the new guidance introduces the OFAC concept of a “base penalty amount.” Like OFAC base penalties, the BIS base penalties will be determined by whether the violation was egregious and whether it was voluntarily disclosed. Once a base penalty amount is determined, the amount can move downward or upward based on mitigating and aggravating factors. (more…)

U.S. importers should reevaluate their compliance program as U.S. Customs and Border Protection (CBP)’s steps up its efforts to enforce payment of antidumping and countervailing duties. The efforts come at the heel of this February’s passage of the Trade Facilitation and Enforcement Act, which gave CBP new investigatory authority over claims that certain importers are not paying duties. A new interim final rule is expected by Aug. 22. Importers of steel and other goods from China should be especially cautious. (more…)

There has been a change in the US Department of Justice regarding corporate disclosures. The recently updated United States Attorney’s Manual has revised its provisions called the “Principles of Federal Prosecution of Business Organizations.” These Principles, commonly referred to as the Filip factors, determine when a company gets “mitigation credit” in a civil or criminal prosecution of any kind, including trade matters. Until this November 2015 change, companies would get “mitigating credit” for any voluntary disclosure. If they disclose all known information they will receive a large mitigation benefit. If the company discloses only a little data, it could still receive some credit for cooperating. However, this new policy requires that a company reach a “threshold hurdle” by providing the government with a complete picture of all individuals involved and all facts relating to the misconduct in order for the government to consider providing any cooperation credit for the disclosure by the company. This new policy is meant to help the Department prosecute individuals. (more…)

The Department of Justice’s (DOJ’s) Criminal Division has now hired “Compliance Counsel” but the Department has no plans to move towards making a formal compliance defense available to those charged with regulatory violations.  Assistant Attorney General Caldwell also noted that “[t]he quality and effectiveness of a compliance program is also an important factor that prosecutors consider in determining whether to bring charges against a business entity that has engaged in some form of criminal conduct.”  Ms. Caldwell went on to caution  against mere “window dressing” and “paper programs,” encouraging companies to opt for fostering a corporate culture that actually, actively and visibly supports compliance if they want the DOJ to view their efforts favorably when misconduct occurs. (more…)